FG raises pan-industry committee on swift subsidy payment
Federal government yesterday constituted a pan-industry committee to explore resolution of lingering dispute between the Ministry of Finance and petroleum products marketing and trading companies over delays in payment of subsidy reimbursements.
The seven man committee which represents different groups of players in the downstream petroleum industry is to be chaired by the Executive Secretary of the Major Marketers Association of Nigeria (MOMAN), Mr. Thomas Olawore, whose deputy, Mr. E. Kanawa, is drawn from MRS Oil and Gas Limited.
Representing the Ministry of Petroleum Resources in the committee are Mr. G.O Komolafe of the Pipeline and Products Marketing Company (PPMC), a unit of the Nigerian National Petroleum Corporation (NNPC), and Mr. O.O Agbaje of the Petroleum Products Pricing Regulatory Agency (PPPRA), who also serves as the secretary of the committee.
Also featurinz prominently in the committee is Mr. Chris Igwe of Mainland Oil and Gas Limited. Other members of the committee are Mr. Collins Ogbu of Northwest Petroleum and Mr. Richard Eze of Dee Jones Petroleum.
While the first four members represent the major marketers and government agencies in the committee, the rest represent independent marketers and depot operators in the market.
Sources close to the arrangement told newsmen that the committee is to strike an accord with the Ministry of Finance on how to fast track payment of subsidy reimbursements on imported products in order to cut the financial risk exposures associated with the crippling delays.
Constitution of the committee followed stakeholders' resolutions at a meeting on the review of operational issues that account for lingering issues of delayed payments and subsequent frantic efforts by the PPPRA to stave of supply crisis in the market.
MOMAN secretariat had in a media statement declared that unless the prevailing delay in payment is addressed the deep pocket major marketing firms might withdraw from the importation arrangements under the Petroleum Support Fund (PSF) which is in the custody of the Central Bank of Nigeria and administered by the Ministry of Finance. The fund is disbursed to eligible marketers after their bills have been cleared by the PPPRA which also authorizes imports and benchmarks all the claims against global cost templates to ensure that only the differential between expected market price and locally subsidized retail prices are paid. Mr. Olawore had in a media chat said that whereas PPPRA has been quite thorough and swift in verifying claims filed in by genuine marketers, the delays caused by re-verification by the Ministry of Finance has continued to accumulate high interest on the cost of financing imports.
He said such delays have caused an interest build up of over N15.6 billion and trapping of operations funds in the system.
He stated the determination of the major marketers to stop importation of petroleum products if the Ministry of Finance failed to take urgent steps in clearing all outstanding subsidy arrears and associated interest to the group. However, a spokesman in the Ministry of Finance, Mr. Paul Nwabuikwu, had explained that the Ministry and CBN were exhausting efforts to weed out fake marketers that still explored loopholes in the system, adding that some of the claims presented by some marketers were placed under investigation.
According to the ministry, detailed scrutiny of the claims would inevitably take some time and entail delays in payment of claims.
With the constitution of the Olawore committee, it is expected that all parties in the subsidy arrangement would evolve a workable processes of fast tracking claims verification and payment of reimbursements to marketers within the agreed time frame.